Welcome to the FIA News & Insights, a one-stop resource that includes insights from senior investment professionals on timely market events, their views on the economy and their respective markets. Find updates on the latest media information on Frost Investment Advisors, LLC and the most recent reprints, as well as, archival information for your reference.
All Eyes on Guidance
With the sharpest drop since pandemic-related shutdowns in 2020, second quarter earnings per share for the S&P 500 are expected to fall 9% year over year. That’s a fourth consecutive quarter of declining earnings. With recent upside surprises in the economic data, this quarter is forecast to be the trough, with anticipated earnings rising sharply into the end of the year, and a 12% gain expected for 2024. This shift is predicated on the idea that profit margins will begin to rise through year end after declining over the past two years. Valuations are rich, with the forward PE ratio currently at 19.5, above five- and 10-year averages. Coupled with higher Treasury yields, the equity risk premium for the index sits near a record low. As earnings season continues, management guidance will be an important consideration for investors.
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